Removing the PPI Cap Undermines NHS Values

The private patient income (PPI) cap was included in the legislation that established Foundation Trusts - the Health and Social Care Act 2003[1] - and also the National Health Service Act 2006[2].

It was designed to reassure the public that giving some hospitals more autonomy would not lead to them prioritising income from private patients at the expense of NHS patients.

Every hospital had its income capped at the proportion of PPI it was already generating in 2002-3[3], which was to ensure that there was no change in the access of NHS patients to services.

However, there have been ongoing issues about the PPI cap, because it only applied to Foundation Trusts (FTs), and the level was not the same for every hospital[4].

Health and Social Care Bill 2011

Clause 162 of the Health and Social Care Bill proposes to abolish the cap so that Foundation Trusts have freedom to generate any amount of private patient income[5].

The BMA is opposed to the abolition of the cap, which is sees as having “the potential to act as an incentive for foundation trusts to undertake more non-NHS activity at the expense of NHS patients’ ability to access services.”[6]

In a joint letter to the Times on 6th September 2011, the BMA, RCGP, 3 other Royal Colleges and 2 other NHS professional bodies said that they “share a number of …….concerns, including the removal of the private patient income cap..”[7]

In the current climate, where NHS funding has been frozen even though demand is rising, Foundation Trusts will be tempted to prioritise schemes by which they can increase their private patient income rather than those that benefit NHS patients directly.

The NHS has key priorities to maintain quality whilst finding £20bn of efficiency savings. Total income in NHS and Foundation Trusts from treating private patients amounted to just £421m in 2010-11[8][9], and Trusts are likely to generate no more than a £50m surplus from that. Therefore the argument that increasing private patient income by removing the cap will play a significant role in meeting the £20bn efficiency target is clearly wrong.

However, the removal of the private patient income cap will undo the current safeguards, and encourage hospitals to embrace a fully 2-tier health service, making profits from private patients in any way that they can. This will be at great cost to the values of the NHS.

As waiting lists rise due to lack of NHS funding, we will see more private patient queue jumping, with no restriction on the number of patients hospitals can allow to queue jump. This serious concern was recognised in the Bill’s Impact Assessment, which states that “there is a risk that private patients may be prioritised above NHS patients resulting in a growth in waiting lists and waiting times for NHS patients.”[10] In addition to getting faster treatment, there may well be new services on offer for those who can pay.

In the Guardian on 20th October 2011, Dr Clare Gerada, Chair of the Royal College of GPs, said “I worry we're heading towards a situation where healthcare will be like a budget airline. There'll be two queues: one queue for those who can afford to pay, and another for those who can't. Seats will be limited to those who muscle in first. And the rest will be left stranded on the tarmac.”[11]

Conflict over priorities

The removal of the cap is a clear indication from government that treating more private patients is a good thing and should be encouraged. This may well change the behaviour of all Trusts, NHS and Foundation, who currently do not focus on private patient activity to any significant extent. Private sector providers will approach Trusts to encourage them to enter into joint ventures and partnerships – hoping to exploit the new opportunities presented by the removal of the cap.

In addition, removing the PPI cap will create new conflicts of interests for Trusts and their clinicians. The rules surrounding when and how a consultant is allowed to undertake private work are not detailed. The BMA’s code of conduct for private practice states that “private patients should not prejudice the interests of NHS patients”[12]. However, it also states “There will be circumstances in which consultants may reasonably provide emergency treatment for private patients during time when they are scheduled to be working or are on call for the NHS.”[13]

Inevitably, if Trusts increase their volume of private patient work, there are likely to be more circumstances where a conflict arises between private and NHS work. If Trusts encourage consultants to do more private work, clearly Trusts may choose to follow their own interpretation of what level of activity is not prejudicial to NHS patient care.

In addition, Trusts will be able to argue that increasing their private work will help them improve NHS services, as suggested by the government[14]. So staff will be asked to operate a 2-tier health service, with the implication that, if they do not agree, NHS services will suffer in terms of quality that could be offered, or even potentially be unsustainable. This is an unacceptable pressure to put on staff, who want to run a service that is fair for everyone. Many staff did not join the NHS to offer a 2-tier service.

What the government says

The Impact Assessment states that there are a number of mitigating circumstances that will prevent FTs concentrating on private patients to the disbenefit of NHS patients[15].

One is that FTs will risk losing NHS patients if their volume of private patients makes NHS waiting lists rise. However, this would depend entirely on the length of NHS waiting lists, and whether NHS waiting lists are rising in all surrounding FTs for the same reason.

The Impact Assessment states also under B155 that governors will ensure FTs retain a focus on the public interest. However, a review of the evidence undertaken by the Kings Fund in 2011 found there was a very mixed picture about the effectiveness of Foundation Trust governors, including their impact on FTs’ strategic decision-making[16].

The Impact Assessment also provides evidence under B155 that most FTs have operated below their PPI limit, and therefore concludes that “many FTs will not automatically make use of any ability to earn private income offered to them.”

However, up until now FTs had been operating in an environment of increasing NHS activity and increasing NHS investment. It is impossible to rule out the fact that FTs will choose to behave differently during a freeze in NHS funding.

Simon Burns, Minister of Health, said that removing the private patient cap “would allow foundation trusts to earn more income to improve NHS services.”[17] Therefore the government clearly is expecting an increase in PPI.

The Impact Assessment states that “To provide assurance and transparency, FTs will be required to produce separate accounts for NHS and private-funded services”[18], and an amendment to the Bill to this effect is due to be debated in the final stages of the Lords’ Committee[19].

Showing separate accounts might allow governors and commissioners to see more explicitly the Trust’s strategy towards private patient income, and whether this is being achieved to the detriment of NHS patients. However, without any rules stating that a 2-tier service is wrong, it is hard to see how governors or commissioners can make the case that NHS patients are being treated unfairly in terms of services or access to care.

The government is confident that FTs will invest surplus from private patient income to improve services for NHS patients. However, this would require FTs to have fully audited accounts demonstrating the use made of surpluses, as otherwise surpluses could be reinvested solely for the benefit of generating more private patient income.

In addition, there is a danger that increasing private patient income overall risks the opposite situation, where a loss on private patient income is cross-subsidised from NHS income, directly to the disbenefit of NHS patients.

In fact, there is already evidence that NHS funding is subsidising private patients treated in NHS hospitals. An HSJ investigation into private patients in 2007-8 found that “30 per cent of patients who pay to receive private treatment in NHS hospitals are charged less than their care costs the trust.”[20]

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